A Delay in Protalix's Uplyso FDA Review Is Not a Disaster

Unlike the World Cup, in the race to get a product on the market in an orphan indication there are no silver or bronze medals, only a standard 10-month regulatory review period. This is what Protalix (NYSEMKT:PLX) has learned as the FDA handed it a standard review, with a February 25, 2011, PDUFA date, for the Gaucher’s disease drug Uplyso.

With the continued uncertainty over the supply of Genzyme’s (GENZ) Cerezyme (Genzyme moves on but faces uncertain future, May 25, 2010), many observers had been expecting an expedited review for Uplyso. However, the entrance of Shire’s (SHPGY) Vpriv into the marketplace may be filling the gap. With Genzyme having told analysts and investors that Cerezyme production will slowly increase from current 50% levels in late summer, perhaps the FDA believed market demand was being met and another expedited review was unnecessary.

The Israeli company’s shares continue to languish well below the two-year high of $12.14 they touched November 9, 2009, a month before it brought Pfizer on board to commercialise Uplyso worldwide outside of Israel.

After Protalix submitted its manufacturing validation data to the FDA in late April – the date from which the review clock started ticking - some analysts anticipated a fourth quarter launch date based on an expedited review. That clearly will not happen now, undoubtedly erasing $3m in royalty revenue for 2010 in EvaluatePharma’s consensus forecast and casting doubt on the $6m forecast for next year.

The earliest forecasts for Uplyso, dating back more than two years, estimated worldwide 2010 sales of $34m.

Little competition

A genetic disorder, Gaucher’s disease is an enzyme deficiency that causes lipids to accumulate in cells and certain organs, causing organ dysfunction, skeletal disorders, neurological complications, anaemia and other symptoms. Genzyme’s Ceredase was the first drug for the indication, introduced in 1991, with Cerezyme introduced three years later and all patients switched by 1998.

As such, Genzyme has had the indication pretty much to itself, and from a competitive standpoint its manufacturing problems could not have come at a worse time – particularly for a mature product that can cost $200,000 a year and earned the Massachusetts company more than $1bn annually before the virus contamination was discovered at its Allston Landing manufacturing plant.

Meanwhile, Vpriv is off and running. Available on an approved treatment protocol basis before its formal OK in February this year – its PDUFA date was almost exactly a year before Uplyso’s current date - it notched up $3m in sales in the last quarter of 2009 and $6m in the first quarter of 2010. Most of that was prior to the FDA approval. Consensus forecasts put sales at $72m this year and $300m by 2016.

A later than expected PDUFA date is not a disaster for Uplyso. However, it is clearly a disappointment to Protalix’s investors, allowing Vpriv a decent head start and Cerezyme production to recover, undoubtedly cutting into Uplyso’s earnings in the next two years.